033-NLR-NLR-V-67-THE-CHARTERED-BANK-Appellant-and-L.-N.-DE-SILVA-and-others-Respondents.pdf
1964Present: Sri Skanda Rajah, J., and Alles, J.
THE CHARTERED BANK, Appellant, and L. N. DE SILVAand others, Respondents
8. C. 19 (Inty.)/1961—D. C. Colombo, 46569/M
Addition of parties—Scope of a. 18 (1) of Civil Procedure Code—Witness—Right toobject to being added as a party—Contract of suretyship—Action instituted byguarantor against principal debtor—Non-liability of creditor to be added as aparty.
A person who is no more them an important witness in a case is not liableto be added as a party to the case in terms of section 18 (1) of the Civil ProcedureCode on the pretext that his presence is necessary “ in order to enable thecourt effectually and completely to adjudicate upon all the questions involvedin the action ”,
In a contract of suretyship, the principal debtors were the 1st and 2nddefendants, the creditor was a Bank, and the guarantor was the plaintiff.The Bank demanded payment of a sum of Rs. 28,520*02 from the plaintiff,who complied and sued the defendants for the recovery of the sum. Thedefendants pleaded that the Bank had, in breach of certain terms, wronglycalled upon the plaintiff to pay, and that, therefore, the plaintiff was notentitled to recover the sum from the defendants. On the trial date, theplaintiff and the defendants moved to add the Bank as a party to the actionunder section 18 (1) of the Civil Procedure Code “ for the complete andeffectual adjudication of all matters in this case ”. Although the Bank filedobjections, the application of the parties was allowed.
Held, that the Bank was not liable to be added as a party. The cause ofaction against the defendants was quite different from the cause of actionagainst the Bank. The Bank was undoubtedly a material witness, but theprocess of the Court was available to the parties to compel the Bank to producethe necessary documents.
Appeal from an order of the District Court, Colombo.
E. W. Jayewardene, Q.C., with L. C. Seneviratne and D. S. Wije-txvardene, for Added-party Appellant.
H. V. Perera, Q.C., with C. G. Weeramantry and V. Martyn, forPlaintiff-Respondent.
M. Tiruchelvam, Q.C., with C. D. S. Sirivxirdene and Mark Fernando,for 1st and 2nd Defendants-Respondents.
Cur. adv. vult.
October 6, 1964. Sri Skanda Rajah, J.—
At the conclusion of the argument we allowed the appeal with costsin both Courts and reserved the reasons for a later date. They are setdown now.
The facts leading up to this appeal are briefly :—
The two defendants contracted with the Ceylon Government Railwayto supply railway sleepers to be imported from Bangkok. For thatpurpose they caused the Chartered Bank (hereinafter referred to asthe Bank) to open a letter of credit in favour of the shippers in Bangkokfor a sum of Rs. 68,520*02 with the plaintiff as guarantor. The Bankpaid this amount to the shippers and called upon the defendants topay it. The defendants paid the Bank Rs. 40,000 but failed to paythe balance. Thereupon, the Bank demanded payment of the balancefrom the plaintiff, who complied and filed this suit against the defendantsfor the recovery of the Rs. 28,520*02. The defendants filed answerdenying liability alleging that they were not under obligation to makegood to the Bank the payment made by it to the shippers because thepayment was in breach of certain terms. Therefore, the plaintiff wasunder no obligation to pay the Bank. Therefore, the plaintiff cannotrecover it from the defendants. The case was fixed for trial on 29.1.1961and the parties got ready for it. The defendants filed their list ofwitnesses and documents in which the Bank was mentioned as witnessand also the necessary documents which were in its possession. Theplaintiff did likewise. That is to say, the parties realised that theBank was an important witness because the documents in its possessionwere ^ital for the determination of the issues. On the trial date“ counsel for both parties agreed that the Bank should be made a partyto this action in terms of section 18 (1) (of the Civil Procedure Code)for the complete and effectual adjudication of all matters in disputein this case ”. Thereupon, in total disregard of the appropriate procedure,the Bank was added as the third defendant and summons ordered.The Bank filed objections and they were inquired into. At the inquiryobjection regarding procedure was waived. Therefore, that matterdoes not merit our attention now. After hearing argument into theother objections order was made dismissing them. That order is thesubject of this appeal.
The provision regarding the joinder of defendants in the plaint isfound in section 14 of the Civil Procedure Code, the relevant portion ofwhich reads :—
“ All persons may be joined as defendants against whom the rightto any relief is alleged to exist, whether jointly, severally, or in thealternative, in respect of the same cause of action. ”
The corresponding provision in India is in Order I Rule 3 in the firstschedule of the Code of Civil Procedure.
The relevant portion of section 18 (1) of the Civil Procedure Coderuns thus :
“ the Court may order that the name of any person who ought tohave been joined, whether as plaintiff or defendant, or whose presencebefore the Court may be necessary in order to enable the Court toeffectually and completely to adjudicate upon and settle all thequestions involved in the action, be added. ”
The corresponding provision in India is part of Order I Rule 10 (2)and that in England is :
“ the Court may order any person whose presence before the Courtis necessary to ensure that all matters in dispute in the cause ormatter may be effectually and completely determined and adjudicatedupon be added as a party. ”
Section 18 (1) of our Code, like Order I Rule 10 (2) of the Indian Code,makes a distinction between two classes of persons, viz., persons whoought to have been joined, i.e., necessary parties, and persons whosepresence is necessary to enable the Court to completely and effectuallyto adjudicate upon and settle all the questions involved in the suit, i.e.,proper parties. The plaintiff and defendants sought to bring the Bankunder the second category.
The plaintiff’s cause of action against the defendants arises on a con-tract of suretyship. His cause of action, if any, against the Bank ariseson quasi-contract known as condictio indebili, which is an action for therecovery of money which was not due but which was voluntarily paidunder mistake. They are different causes of action. The respondentsconceded that the plaintiff could not have filed action joining thedefendants and the Bank under section 14. If he could not do so hecannot be permitted to achieve it indirectly by seeking the Court’sintervention under section 18 (1).
If the plaintiff instituted the suit joining the defendants and the Bankuniting the two causes of action it would have been open to the defend-ants and for the Bank to raise the plea of misjoinder of parties andcauses of action. Then the plaintiff would have had to amend hisplaint and elect as to the party against whom he would proceed ;otherwise his action will be dismissed : Kanagasabapathy v. Kanagasabaiet al.1; Sivakaminaihan v. Anthony et al.2; Grace Fernando et al. v.Fernando3.
To add the Bank under the provisions of section 18 (1) would resultin misjoinder of parties and causes action. If joinder of defendants isimpossible under section 14 it does not become possible under section18 (1).
It is relevant to mention that in Chidambaram Chettiar v. SubramaniamChettiar and others 4 it was held that if joinder of plaintiffs is impossibleunder Order I Rule 1 (which corresponds to the first part of our section 11regarding joinder of plaintiffs) it does not become possible underOrder I Rule 10 (our section 18 (1) ).
In our view sections 14 and 18 (1) should be read together.
When an application is made under section 18 (1) to add a party whatthe Court ought to see is whether there is anything which cannot bedetermined owing to his absence or whether he will be prejudiced byhis not being joined as a party (vide Vattam Ramakrishnayya v. VaiiiniSatyanarayana and others 5).
1 (1923) 25 N. L. R. 173.* (1937) 9 C. L. W. 99.
* (1935) 3 C. L. W. 51.* A. 1. R. 1927 Madras 834.
* A. l.R. 1929 Madras 291.
In the present case there is nothing that cannot be determined inregard to the contest between the plaintiff and the defendants owingto the absence of the Bank as a party defendant. The process of theCourt is available to the plaintiff and the defendants to compel theBank to produce the necessary documents.
The respondents strenuously argued that in order to avoid multipli-city of actions the Court properly exercised its discretion in addingthe Bank as party defendant. Certain English and Indian cases inwhich persons who sought intervention were added were cited in support.
In Vydianadayyan v. Silaramayyan1 the ground for interventionwas that the debt sued was due to the joint family of which theintervenient and the plaintiff were members and not merely the plaintiff.The intervenient had already filed an earlier suit against the samedefendant on the basis that the debt was due to the joint family andit was pending when the plaintiff sued the defendant on the basis thatit was a personal debt due to him.
In 5 Madras 52 (supra) the learned Judges said, 14 Is it meant by thesewords that a person not originally impleaded is to be made a partyonly if the questions raised in the suit cannot otherwise be completelyand effectively determined between the parties to the suit ? or is itmeant completely and effectively determined so that they shall not beagain raised in that or in any other suit between the parties to the suitor any of them and third parties ? To accept the more restricted inter-pretation involves the addition of words which we do not find in thesection, namely, ‘ between the parties to the suit This was referredto in the two cases which now follow.
In The Secretary of State v. Murugesa Mudaliyar2, the Governmentof Madras sought intervention. It was a case in which the plaintiffsued the District Board and its President for a declaration that he wasduly elected member by a resolution of the Board. Intervention wasallowed on the ground that the Government was a proper party to thesuit inasmuch as it was given power over the Board and to suspendexecution of any resolution.
Parasuram Mangacharyulu v. Parasuram Krishnamacharyulu3: Thiswas a suit for declaration of title to certain rights and the intervenientclaimed joint interest in those rights with one of the plaintiffs and deniedthe title of the other plaintiff. The genealogical table reproduced inthe judgment shows this clearly.
In the last two cases reference was made to Montgomery v. Foy4,which was an action by a ship-owner for a declaration that he wasentitled to freight against a consignee of the goods who had no propertyin the cargo and it was held that the shippers of the cargo who appliedto be added as defendants were proper parties and that they should beadded in order that they might counter-claim against the plaintiffsdamages for short delivery and injury to cargo. Lord Esher, M.R.,
1 6 Madras 52.* A. I. It. 1929 Madras 443.
* A. l.R. 1940 Madras 225.4 (1895) 2 Q. B. 321.
said in Montgomery, “ Then comes the question whether, for the purposeof preventing the useless and expensive formality of having two separateactions, the Court may not add the owners of the cargo as defendantsin the original action and so settle the whole matter in one action andin one trial ”. He explained that it was one of the great objects ofthe Judicature Acts that where there is one subject-matter out ofwhich several disputes arise all parties should be brought before theCourt and all disputes should be determined in one and the same action.
The contrary view had been taken earlier by Coleridge, C. J., in Norrisv. Beazley1. Lord Esher said in Montgomery {supra), “With regardto the case of Norris v. Beazley, it is to he observed that it was decidedat an early stage of the decisions with regard to the meaning of theJudicature Acts, and though I do not say that the actual decision waswrong, I do not think that all the statements made in the judgmentscould now be supported ”.
As pointed out by Devlin, J., in Amon v. Raphael Tuck & Sons Ltd. 2,“ In this case (Montgomery) the plaintiff was, in substance, suing theintervener because he was the person, as Lord Esher, M.R., said whomade the contract of affreightment and out of whose pocket the freightcame
We would observe that there is often danger in acting on the principlestated in a decision without reference to the facts in respect of whichit came to be so formulated.
In Amon {supra) at 279 Devlin, J., said “ It is not, I think, disputedthat * the cause or matter ’ (in the relevant English rule) is the actionas it stands between the existing parties. If it were otherwise, thenanybody who showed a cause of action against either a plaintiff ordefendant could, of course, say that the question involved in his causeof action could not be settled unless he was made a party. ”
In Amon {supra) Devlin, J., after exhaustively reviewing the autho-rities beginning from Norris {supra), held himself bound to decide againstthe view expressed by Esher, M.R., in Montgomery {supra). The viewexpressed by Devlin J., has found acceptance in Miguel Sanchez andCompania S. L. v. Result et al.z and Fire, Auto and Marine InsuranceCo., Ltd. v. Qreenex.
The more restricted interpretation referred to in the last mentionedcase has found favour in recent decisions. The Indian cases following5 Madras 52 and Montgomery {supra) can no longer be regarded asexpressing the correct interpretation of the provision under consideration.
In all these cases the intervention was sought by a third person.But in the present case both parties to the suit seek to add a party, whoresists the application.
In Kumarihamy v. Dissanayake et al. 5, an important witness, asin this case, was held to have been wrongly added.
1 {1877) 35 L. T. 846.* (1958) P. 174.
* (1956) I A. E. R. 273 at 278.* (1964) 2 A. E. R. 761.
* (1936) 37 N. L. R. 345.
We cannot help observing that this interlocutory appeal from anorder adding a party has taken three years and eight months for disposal,with the inevitable consequence of delaying the final disposal of thesuit itself.
Alles, J.—
I have had the advantage of reading the judgment proposed by mybrother Sri Skanda Rajah, J. and would like to add my own observationson the question of law that arises for decision in this appeal.
The plaintiff sued the defendants for the recovery of a sum ofRs. 28,520*02 which the former paid to the added party, the CharteredBank, on behalf of the defendants as guarantor. On the trial datethe plaintiff and the defendants moved to add the Bank as a party tothe action under s. 18 (1) of the Civil Procedure Code “ for the completeand effectual adjudication of all matters in dispute in the case ”.Despite the objections of the Bank, the application of the parties wasallowed and the present appeal is from that order. My brother hasdealt with the merits of the application to which I have nothing usefulto add.
Mr. H. V. Perera, Q.C., who appeared on behalf of the plaintiff reliedon the Indian case of Parasuram Mangacharyulu and others v. ParasuramBalarama Krishnamach a ryulu1 in support of the proposition that aperson may be added as a party to a suit when his presence before theCourt is necessary to enable the Court effectually and completelyto adjudicate and settle all the questions involved in the suit andnot merely the questions between the parties to the suit. His submissionwas that the addition of the Bank as a party to the suit was necessaryin this case so that all questions involved in the suit should be adjudi-cated upon. My brother has demonstrated quite clearly that for thepurpose of adjudicating on the matters in issue in the present caseit was unnecessary to add the Bank as a party. In the Madras casethe learned Judge purported to follow the dictum of Lord Esher inMontgomery v. Foy, Morgan & Co.2 which was a case of a contract ofaffreightment where the Judge made the general observation “ thatfor the purpose of preventing the useless and expensive formality ofhaving two separate actions, the Court may add the owners of the cargoas the defendants in the original action to settle the matter in one actionand at one trial ”, The view expressed by Lord Esher has been con-sidered by Devlin, J. in the leading case of Ainon v. Raphael Tuck <SaSons3. After dealing with the facts of Montgomery's case Devlin J.said that in that case the plaintiff was in substance suing the intervenerbecause he was the person who made the contract of affreightmentand out of whose pocket the freight came and therefore the intervenerwas properly added as a party. In Amon's case Devlin J. laid down theprinciple that the test whether the Court had jurisdiction to add a party
1 (1940) A. J. R. Madras 225.» (1895) 2 Q. B. 321.
* (1956) 1 A. E. R. 273.
depended on whether the order for which the plaintiff was asking in theaction might directly affect the added party by curtailing the enjoy-ment of his legal rights. “ The only reason which makes it necessaryto make a person a party to an action is so that he should be bound by theresult of the action, and the question to be settled, therefore, must be aquestion in the action which cannot be effectually and completely settledunless he is made a party
The principle laid down by Devlin J. has been followed in two latercases—Miguel Sanchez <£ Campania S. L. v. Result et al.1, and Fire, Auto& Marine Insurance Co. Ltd. v. Greene 2.
In the former case the third parties agreed to buy from the plaintiffs6000/7000 cases of oranges and chartered two ships for the carriage ofthe oranges to the United Kingdom. The plaintiffs shipped only 1000cases of oranges and on the arrival of one of the ships, the Result, thedefendants (the owners of the Result) without the production of thebill of lading or the authority of the plaintiffs and in return for and in'consideration of an indemnity whereby the third parties agreed toindemnify the defendants against all consequences of delivery, deliveredthe 1000 cases of oranges to the third parties, who claimed that theproperty therein had passed to them. The plaintiffs commenced anaction in rem against the owners of the Result claiming damages forbreach of contract of carriage under the bill of lading in that thedefendants delivered the 1,000 cases of oranges, the property in whichhad remained in the plaintiffs, without the production of the bill oflading or the authority of the plaintiffs, and alternatively, damages forconversion. The third parties applied for an order to be joined asco-defendants in the action so that they could counter-claim againstthe plaintiffs claiming damages for breach of contact of sale. Thiswas allowed and the plaintiffs appealed from that order. It was heldthat with regard to the tliird parties’ counter-claim in respect of the6000 cases of oranges which were not shipped, the legal rights soughtto be asserted by this counter-claim were unaffected by the plaintiffs’claim in the “ cause or matter ”. It was further held that the only reasonwhich made it necessary to add the name of a party to an action is sothat the party may be bound by the result of the trial and the questionto be settled must be a question which cannot be effectually and com-pletely settled unless the party is so joined. Inasmuch as the plaintiffswere pursuing a remedy in rem against the ship, which, prima facie,they were entitled to pursue, it could not be said that the action was notproperly constituted and therefore the third parties were not parties whoshould have been joined in the action in the first instance.
In Fire, Auto and Marine Insurance Co. Ltd. v. Greene, the Judgein refusing the third party to be added held that the third party “ mustat least be able to show that some legal right enforceable by him againstone of the parties to the action or some legal duty enforceable againsthim by one of the parties to the action will be affected by the result ofthe action
* (1964) 2 A. E. R. 761.
1 (1958) Probate 174.
I therefore agree that the principle laid down in Atnon’s case andfollowed in the later decisions should be preferred to the broad general-isation of Lord Esher in Montgomery's case. Otherwise as Devlin J.remarked in Atnon's case “ anybody who showed a cause of action againsteither a plaintiff or defendant could, of course, say that the questioninvolved in his cause of action could not be settled unless he was aparty
Applying therefore the principles laid down by Devlin J. and followedin the later English cases to the facts of the present case what are thelegal rights of the Bank which can be affected by the result of the actionbetween the plaintiff and the defendants ? The plaintiff is suing thedefendants on a contract of suretyship for monies which the plaintiffpaid to the Bank on behalf of the defendants. The Bank is not inter-ested in the result of the action as all the monies advanced by them onbehalf of the defendants have been recovered. The result of the actionbetween the plaintiff and the defendants cannot in any way affect thelegal rights of the Bank.
The Bank would undoubtedly be a material witness in the suit betweenthe parties and as my brother has remarked “ the process of the Courtis available to the parties to compel the Bank to produce the necessarydocuments ”. In disallowing an application to add a party underSection IS (1) of the Civil Procedure Code, Dalton S.P.J. in Kumarihamyv. Dissanayake1 said “ the presence of Dissanayake (the added party)as a party was quite unnecessary for the purpose of enabling the Courteffectually and completely to adjudicate upon and settle all the questionsinvolved in the action. He was clearly an important witness ”. Thesame considerations apply in the present case.
Appeal allowed.